Hello Gang:

New user here and yea, i'll admit it...a newbie! We all have to get rid of our diapers some time! I'm pretty sure that I have this L/O thing down in my brain pretty good and I have decided to take the plunge and order a L/O course. BUT, i do have some concerns and many questions and I'm sorry if some of these questions cross over different forums.

What's the difference between a L/O and a straight option to purchase Real Estate?

I'm now really excited and want to become the next Donald Trump!! But, please correct me if i'm wrong here:

I go to contract with an owner to L/O his house for ten bucks. I run, not walk to the county recorders office and check the title. While i'm looking things up I also want to read his mortage docs to see if there is any prepayment penalities. If everything looks good, I record the lease purchase agreement, this will cloud his title and keep him from selling to someone else.

I now control the property in question BUT do not own it. This is a good thing. BUT what happens if the owner gets into legal problems ( tax, divorce, automobile accident, ect)and all sorts of liens are filed and attached to his property? This will stop me from delivering a clear title to my T/B in the future, especially if the liens exceed the home value. ( Thanks to the lawyers) LOL

Wouldn't it be better if he just deeded the house over to me...and had the deed held in escrow or something along this lines?

Thanks in advance, and glad to be on board
Kerry

Kerry, welcome, there's no turning back now......ha.ha.haaaaaaa

With a L/O there is a lease term involved, with a straight option to purchase the house must be paid for in full before the option to purchase expires.


Sounds good, if you're remaining in the deal throughout the lease, just to be on the safe side.

As far as all that other stuff, ummmm....errrrrr.......I like to keep it simple, get a house under a lease agreement as well as an Option to Purchase agreement, find a Tenant/Buyer and assign them the rights to these two agreements for a fee that goes towards the purchase price.

Hope that helps, and good luck.

Well, until the *one and only* Michael C gets here to officially welcome you, Kerry, may I temporarily welcome you to the Naked Investor!

In the words of one Adam King, Certified Hunk:



(Copyright Adam King 2004)
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Glad to have ya, Kerry!

Funny post, Rick!

Kerry, let me be the first, uh, second to welcome you to The Naked Investor!
What JC said. The former is a lease with an option to purchase. The latter is an option to purchase at a set price within an agreed to time frame. There is no lease involved, and neither entails an obligation to purchase.
Why?? The man is soft and doughy, has bad hair, has numerous failed marriages, and has filed bankruptcy three times. What he is good at is self promotion. Rant over...

The concerns you write are well founded, but you are overthinking the process, my friend. It's good to be careful, but not to the point where you scare yourself out of doing deals. There are certain things you can do to protect your position in a sandwich lease deal. You already noted a title search, for example, and recording a memorandum of option. You can take it a step further if you prefer, and record a Performance Mortgage. A stronger document, to be sure, but also a document more likely to make a homeowner think twice, and maybe run to an attorney for clarification. And if that happens, the deal is probably dead.
Of course, another tool we have are the very contracts we use, which go a long way to protecting our position in any deal we do.
Sure. But, first, that isn't always possible. Not every homeowner is willing to do that. And, as a n00b, not every buyer is ready and able to handle the responsibilites of being a landlord, either. Taking the deed has its pros and cons, Kerry.